It’s only a matter of time before technology takes over many of our jobs. We’ve seen robots take over in auto-plants, and grocery store cashiers are being replaced by self-checkout kiosks. This article, in theory, could even be put together by AI (don’t worry, it wasn’t).
It’s clear bankers, who are notoriously highly-paid, are next on the list. A recent study by Wells Fargo found that in the next five years, up to 100,000 jobs in finance could be cut due to advancements in technology. Mark Mayo, the study’s chief analyst, called it “the biggest reduction in U.S. bank headcount in history.” The news wasn’t terribly surprising — earlier estimates put the possible damage at 200,000 jobs over the next decade.
Taking a close look at Thinknum headcount data, we can already see evidence of robots creeping into the finance industry, and pushing bankers out. According to our data, banking currently accounts for 25,688 of the 172,008 finance jobs in the U.S. That slice of the industry pie has shrunk by 27.5% since early 2018.
Meanwhile, software development jobs in finance are steadily on the rise. Currently, there are 20,089 of those jobs in the sector. That share of the U.S. finance industry has grown 32.3% over the same period. In other words, the share of the industry occupied by bankers has dwindled by almost the same amount that the share occupied by developers has swelled.
Of course, the industry has been adding jobs in all areas over that time period, so both the total number of bankers and total number of developers have gone up since early 2018.
The pandemic may have played a role in the higher number of developer jobs. By March 2020, both bankers and developers made up around 12% of the overall share. While banking jobs fell sharply (only to bounce back later in the year), developer jobs grew and grew, likely because of the nation’s shift to remote work.
The growing number of job cuts mainly affect low-level employees, including workers at bank branches and call centers, as well as some financial advisors. For banks, the benefits of automation are clear: Financial advising from humans tends to lead to mistakes, with error rates sometimes as high as 30%, according to IBM. The cost of employing a few engineers tends to be less than employing several analysts.
Banks are also trying to compete with the fintech industry, which relies heavily on AI. Last year alone, banks spent over $200 million on IT to stay competitive with a new generation of financial giants like Brex, Plaid, and Stripe.
So what should bankers do to avoid being replaced? Experts say that the only way to stay relevant is to learn to code in order to move up in the ranks as banks push for more efficiency.